Municipalities are playing a bigger role than ever before when it comes to both residential and commercial real estate opportunities, especially when in the preliminary research stages. Just as investors and developers run the numbers on various parcels and the location, and evaluate zoning and infrastructure, there is much more to making the best possible decisions.
Some municipalities offer tax and other financial incentives to developers for certain projects. In some cases, they are in conjunction with federal, state, or county energy incentives, grants, or economic development specialists. I'm amazed at how many people are shocked at how different one city can be from another when it comes to the impact local government can have on the real estate market. Affordable housing is one example.
In Los Angeles County, home ownership has dropped to its lowest level in 50 years at 45%. Meanwhile, the earlier cap on property taxes has resulted in nearly half of L.A. County homeowners living in their current home for more than 20 years, which is a big reason supply is so limited there. Presently, the L.A. County rental stock consists of only 6% of properties which are subsidized by the federal or California government.
Across in New York City, the downtown Brooklyn community has already seen more than 3,700 new apartment units opened through the first seven months of 2025, with more than 1,000 of those being affordable housing. An estimated 1,000 more units are expected to become available within the next six months. That is for just one neighborhood in Brooklyn!
Does this mean a developer should target Brooklyn over Los Angeles?
My answer to this interesting question is that the answer won't be known without plenty of advance research. Are there more resources now available in L.A. which would add incentives to build there? Have the subsidies run out in Brooklyn? Are there other large cities out there with even better and more immediate opportunities?
It is possible that developers in Brooklyn had the right research to be "first in" to capitalize on demand and availability.
https://la.myneighborhooddata.org/solachan-2025-exec-summary/
https://nypost.com/2025/08/19/real-estate/downtown-brooklyn-is-bursting-with-new-housing-options/
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